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Company Benchmarking Analysis Report

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Leading European Home Furniture

and Housewares Retailers –

Company Benchmarking Analysis

Report

Reference code: RT0012CB

Published: December 2011

TABLE OF CONTENTS

Leading European Home Furniture and Housewares Retailers – Company Benchmarking

Analysis Report

© Canadean. This product is licensed and is not to be photocopied Published: Dec 2011

TABLE OF CONTENTS

1 Introduction ........................................................................................................................... 6

1.1 What is this Report About? ............................................................................................................... 6

1.2 Peer Group ...................................................................................................................................... 6

1.3 Retail Channel Definitions ................................................................................................................ 7

1.4 Financial and Operational Metric Definitions .................................................................................... 8

1.5 Summary Methodology ...................................................................................................................10

1.5.1 Overall Research Methodology ................................................................................................................ 10

1.5.2 Scorecard and Heat Chart Methodology .................................................................................................. 11

2 Peer Group Summary Analysis .......................................................................................... 16

2.1 Leading European Home Furniture and Housewares Retailers – Heat Chart ..................................16

2.2 Leading European Home Furniture and Housewares Retailers – Insights from Competitive

Benchmarking Analysis ..........................................................................................................................18

2.2.1 Scale and growth competitive benchmarks .............................................................................................. 18

2.2.2 Operational efficiency competitive benchmarks ....................................................................................... 18

2.2.3 Financial performance competitive benchmarks ...................................................................................... 19

2.3 Howden Joinery Group Plc – Company Benchmarking Scorecard ..................................................20

2.4 Dunelm Group plc – Company Benchmarking Scorecard ................................................................21

2.5 Beter Bed Holding N.V. – Company Benchmarking Scorecard ........................................................22

2.6 Cafom S.A. – Company Benchmarking Scorecard ..........................................................................23

2.7 Carpetright plc – Company Benchmarking Scorecard .....................................................................24

2.8 Topps Tiles plc – Company Benchmarking Scorecard ....................................................................25

3 Leading European Home Furniture and Housewares Retailers – Company

Benchmarking ............................................................................................................................ 26

3.1 Scale and Growth Competitive Benchmarks ...................................................................................26

3.1.1 Leading European home furniture and housewares retailers by revenue, 2006–2010 ........................... 26

3.1.2 Leading European home furniture and housewares retailers by revenue growth, 2007–2010 ................ 28

3.1.3 Leading European home furniture and housewares retailers by retail floor space, 2006–2010 .............. 30

3.1.4 Leading European home furniture and housewares retailers by retail floor space growth, 2007–2010 .. 32

3.1.5 Leading European home furniture and housewares retailers by store count, 2006–2010 ....................... 34

3.1.6 Leading European home furniture and housewares retailers by store count growth, 2007–2010 ........... 36

3.1.7 Leading European home furniture and housewares retailers by employee count, 2006–2010 ............... 38

3.1.8 Leading European home furniture and housewares retailers by employee count growth, 2007–2010 ... 40

3.1.9 Leading European home furniture and housewares retailers by market capitalization, 2006–2010 ........ 42

3.2 Operational Efficiency Competitive Benchmarks .............................................................................44

3.2.1 Leading European home furniture and housewares retailers by EBITDA margin, 2006–2010 ............... 44

3.2.2 Leading European home furniture and housewares retailers by net profit margin, 2006–2010 .............. 46

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3.2.3 Leading European home furniture and housewares retailers by inventory turnover, 2006–2010 ............ 48

3.2.4 Leading European home furniture and housewares retailers by sales per square meter, 2006–2010.... 50

3.2.5 Leading European home furniture and housewares retailers by operating profit per square meter,

2006–2010 ............................................................................................................................................................ 52

3.2.6 Leading European home furniture and housewares retailers by sales per employee, 2006–2010 ......... 53

3.2.7 Leading European home furniture and housewares retailers by operating profit per employee, 2006–

2010 55

3.2.8 Leading European home furniture and housewares retailers by fixed asset turnover, 2006–2010 ......... 56

3.3 Financial Performance Competitive Benchmarks ............................................................................57

3.3.1 Leading European home furniture and housewares retailers by ROCE, 2006–2010 .............................. 57

3.3.2 Leading European home furniture and housewares retailers by return on assets, 2006–2010 ............... 59

3.3.3 Leading European home furniture and housewares retailers by earnings per share (basic), 2006–201060

3.3.4 Leading European home furniture and housewares retailers by P/E ratio, 2006–2010 ........................... 62

3.3.5 Leading European home furniture and housewares retailers by quick ratio, 2006–2010 ........................ 64

3.3.6 Leading European home furniture and housewares retailers by debt to equity, 2006–2010 ................... 65

3.3.7 Leading European home furniture and housewares retailers by debt ratio, 2006–2010 ......................... 66

3.3.8 Leading European home furniture and housewares retailers by capital expenditure, 2006–2010 .......... 67

3.3.9 Leading European home furniture and housewares retailers by EV/sales, 2006–2010 .......................... 69

3.3.10 Leading European home furniture and housewares retailers by EV/EBITDA, 2006–2010 ...................... 70

3.3.11 Leading European home furniture and housewares retailers by interest coverage, 2006–2010 ............. 71

4 Appendix .............................................................................................................................. 73

4.1 About Canadean .............................................................................................................................73

4.2 Disclaimer .......................................................................................................................................73

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LIST OF TABLES

Table 1: List of Home Furniture and Housewares Retailers in Europe, 2010 ........................................................................................................ 6 Table 2: Retail Channel Definitions ....................................................................................................................................................................... 7 Table 3: Financial and Operational Metric Definitions ........................................................................................................................................... 8 Table 4: List of Company Benchmarking Metrics by Pillar ................................................................................................................................... 11 Table 5: Sample Company Benchmarking Scorecard ......................................................................................................................................... 14 Table 6: Howden Joinery Group Plc – Company Benchmarking Scorecard ........................................................................................................ 20 Table 7: Dunelm Group plc – Company Benchmarking Scorecard ..................................................................................................................... 21 Table 8: Beter Bed Holding N.V. – Company Benchmarking Scorecard.............................................................................................................. 22 Table 9: Cafom S.A. – Company Benchmarking Scorecard ................................................................................................................................ 23 Table 10: Carpetright plc – Company Benchmarking Scorecard ......................................................................................................................... 24 Table 11: Topps Tiles plc – Company Benchmarking Scorecard ........................................................................................................................ 25 Table 12: Leading European Home Furniture and Housewares Retailers by Revenue (US$ Million), 2006–2010 ............................................... 27 Table 13: Leading European Home Furniture and Housewares Retailers by Revenue Growth (%), 2007–2010 ................................................. 28 Table 14: Leading European Home Furniture and Housewares Retailers by Retail Floor Space (Thousand Square Meters), 2006–2010 .......... 30 Table 15: Leading European Home Furniture and Housewares Retailers by Retail Floor Space Growth (%), 2007–2010 .................................. 32 Table 16: Leading European Home Furniture and Housewares Retailers by Store Count, 2006–2010 ............................................................... 34 Table 17: Leading European Home Furniture and Housewares Retailers by Store Count Growth (%), 2007–2010 ............................................ 36 Table 18: Leading European Home Furniture and Housewares Retailers by Employee Count, 2006–2010 ........................................................ 38 Table 19: Leading European Home Furniture and Housewares Retailers by Employee Count Growth (%), 2007–2010 ..................................... 40 Table 20: Leading European Home Furniture and Housewares Retailers by Market Capitalization (US$ Million), 2006–2010 ............................ 42 Table 21: Leading European Home Furniture and Housewares Retailers by EBITDA Margin (%), 2006–2010 ................................................... 44 Table 22: Leading European Home Furniture and Housewares Retailers by Net Profit Margin (%), 2006–2010 ................................................. 46 Table 23: Leading European Home Furniture and Housewares Retailers by Inventory Turnover, 2006–2010 .................................................... 48 Table 24: Leading European Home Furniture and Housewares Retailers by Sales per Square Meter (US$), 2006–2010 ................................... 50 Table 25: Leading European Home Furniture and Housewares Retailers by Operating Profit per Square Meter (US$), 2006–2010 ................... 52 Table 26: Leading European Home Furniture and Housewares Retailers by Sales per Employee (US$), 2006–2010 ........................................ 53 Table 27: Leading European Home Furniture and Housewares Retailers by Operating Profit per Employee (US$), 2006–2010 ........................ 55 Table 28: Leading European Home Furniture and Housewares Retailers by Fixed Asset Turnover, 2006–2010 ................................................ 56 Table 29: Leading European Home Furniture and Housewares Retailers by ROCE (%), 2006–2010 ................................................................. 57 Table 30: Leading European Home Furniture and Housewares Retailers by Return on Assets (%), 2006–2010 ................................................ 59 Table 31: Leading European Home Furniture and Housewares Retailers by Earnings per Share (Basic) (US$), 2006–2010 .............................. 60 Table 32: Leading European Home Furniture and Housewares Retailers by P/E Ratio, 2006–2010 ................................................................... 62 Table 33: Leading European Home Furniture and Housewares Retailers by Quick Ratio, 2006–2010 ................................................................ 64 Table 34: Leading European Home Furniture and Housewares Retailers by Debt to Equity, 2006–2010 ............................................................ 65 Table 35: Leading European Home Furniture and Housewares Retailers by Debt Ratio, 2006–2010 ................................................................. 66 Table 36: Leading European Home Furniture and Housewares Retailers by Capital Expenditure (US$ Million), 2006–2010 .............................. 67 Table 37: Leading European Home Furniture and Housewares Retailers by EV/Sales, 2006–2010 ................................................................... 69 Table 38: Leading European Home Furniture and Housewares Retailers by EV/EBITDA, 2006–2010 ............................................................... 70 Table 39: Leading European Home Furniture and Housewares Retailers by Interest Coverage, 2006–2010 ...................................................... 71

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LIST OF FIGURES

Figure 1: Sample Heat Chart .............................................................................................................................................................................. 15 Figure 2: Leading European Home Furniture and Housewares Retailers – Heat Chart ....................................................................................... 17 Figure 3: Top Five European Home Furniture and Housewares Retailers by Revenue (US$ Million), 2006–2010 .............................................. 27 Figure 4: Top Five European Home Furniture and Housewares Retailers by Revenue Growth (%), 2007–2010 ................................................. 29 Figure 5: Top Five European Home Furniture and Housewares Retailers by Retail Floor Space (Thousand Square Meters), 2006–2010 .......... 31 Figure 6: Top Five European Home Furniture and Housewares Retailers by Retail Floor Space Growth (%), 2007–2010 .................................. 33 Figure 7: Top Five European Home Furniture and Housewares Retailers by Store Count, 2006–2010 ............................................................... 35 Figure 8: Top Five European Home Furniture and Housewares Retailers by Store Count Growth (%), 2007–2010 ............................................ 37 Figure 9: Top Five European Home Furniture and Housewares Retailers by Employee Count, 2006–2010........................................................ 39 Figure 10: Top Five European Home Furniture and Housewares Retailers by Employee Count Growth (%), 2007–2010 ................................... 41 Figure 11: Top Five European Home Furniture and Housewares Retailers by Market Capitalization (US$ Million), 2006–2010 .......................... 43 Figure 12: Top Five European Home Furniture and Housewares Retailers by EBITDA Margin (%), 2006–2010 ................................................. 45 Figure 13: Top Five European Home Furniture and Housewares Retailers by Net Profit Margin (%), 2006–2010 ............................................... 47 Figure 14: Top Five European Home Furniture and Housewares Retailers by Inventory Turnover, 2006–2010 .................................................. 49 Figure 15: Top Five European Home Furniture and Housewares Retailers by Sales per Square Meter (US$), 2006–2010 ................................ 51 Figure 16: Top Five European Home Furniture and Housewares Retailers by Operating Profit per Square Meter(US$), 2006–2010 ................. 52 Figure 17: Top Five European Home Furniture and Housewares Retailers by Sales per Employee (US$), 2006–2010 ...................................... 54 Figure 18: Top Five European Home Furniture and Housewares Retailers by Operating Profit per Employee (US$), 2006–2010 ...................... 55 Figure 19: Top Five European Home Furniture and Housewares Retailers by Fixed Asset Turnover, 2006–2010 .............................................. 56 Figure 20: Top Five European Home Furniture and Housewares Retailers by ROCE (%), 2006–2010 ............................................................... 58 Figure 21: Top Five European Home Furniture and Housewares Retailers by Return on Assets (%), 2006–2010 .............................................. 59 Figure 22: Top Five European Home Furniture and Housewares Retailers by Earnings per share (basic) (US$), 2006–2010 ............................ 61 Figure 23: Top Five European Home Furniture and Housewares Retailers by P/E Ratio, 2006–2010 ................................................................. 63 Figure 24: Top Five European Home Furniture and Housewares Retailers by Quick Ratio, 2006–2010 ............................................................. 64 Figure 25: Top Five European Home Furniture and Housewares Retailers by Debt to Equity, 2006–2010 ......................................................... 65 Figure 26: Top Five European Home Furniture and Housewares Retailers by Debt Ratio, 2006–2010 ............................................................... 66 Figure 27: Top Five European Home Furniture and Housewares Retailers by Capital Expenditure (US$ Million), 2006–2010 ............................ 68 Figure 28: Top Five European Home Furniture and Housewares Retailers by EV/Sales, 2006–2010 ................................................................. 69 Figure 29: Top Five European Home Furniture and Housewares Retailers by EV/EBITDA, 2006–2010 ............................................................. 70 Figure 30: Top Five European Home Furniture and Housewares Retailers by Interest Coverage, 2006–2010 .................................................... 72

INTRODUCTION


Analysis Report


1 Introduction

1.1 What is this Report About?

Canadean‘s ‗Leading European Home Furniture and Housewares Retailers – Company Benchmarking

Analysis Report‘ compares the strength of leading home furniture and housewares retailers in Europe

relative to one another and the international averages for retailers in the same channel.

The benchmark analysis is based on key parameters and ratios that explain the performance of a particular

company against that of its immediate peers and its overall channel of operation. As such, it provides an

easy-to-use analysis which highlights the companies that are setting the benchmark performance in their

channel of operation.

1.2 Peer Group

The peer group includes select companies from the Canadean‘s Retailer Company Benchmark database. It

includes public home furniture and housewares retailers based in Europe. The list is sorted in descending

order of 2010 revenues to select a maximum of 10 companies. The peer group used in the company

benchmarking analysis report may differ from those which appear on the Canadean‘s Retailer Company

Benchmark database.

The table below gives the peer list of the leading home furniture and housewares retailers in Europe

considered for this report.

Table 1: List of Home Furniture and Housewares Retailers in Europe, 2010

Company Name Company's Short Name Year End Considered as 2010

Howden Joinery Group Plc Howdens Dec, 2010

Carpetright plc Carpetright Apr, 2010

Dunelm Group plc Dunelm July, 2010

Beter Bed Holding N.V. Beter Bed Holding Dec, 2010

Cafom S.A. Cafom Mar, 2011

Topps Tiles plc Topps Tiles Sep, 2010

Source: Canadean © Canadean

Year End – For peer group benchmarking, fiscal years ending between April 2010 and March 2011 are

considered as the year 2010. For instance, Cafom‘s fiscal year ending March 2011 has been considered as

2010. The same methodology is used for all years and all companies.

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1.3 Retail Channel Definitions

Table 2: Retail Channel Definitions

Channel Group Channel Definition

Discount retailers Cash and carries and warehouse clubs

Cash and carry traders sell from a wholesale warehouse to customers such as small retailers and professional users, who pay on the spot and transport the goods away themselves. Warehouse clubs are no-frills stores that sell discounted goods to members who pay an annual fee. Delivered wholesale sales are not included.

Discount, variety stores and general merchandise retailers

Discount and variety stores includes all sales through stores that sell inexpensive items, especially cleaning supplies, toys and confectionery, at a single or limited number of price points, and are often named after the price of the merchandise, such as Dollar Store or Pound Store. General merchandise includes all sales through stores that offer a wider selection of primarily non-food goods at inexpensive prices.

General retailers Convenience stores and gas stations

Includes all sales through stores of an area generally less than 300 square meters that specialize in a limited range of food and grocery products, designed primarily for consumers seeking convenience. Also included are sales in kiosks, newsstands and retail outlets attached to gas stations where fuel is the main revenue driver.

Department stores Includes all sales through multi-category retailers, focusing primarily on non-grocery categories with distinct departments specializing in defined product areas.

Hypermarkets, supermarkets and discounters

Hypermarkets and mass merchandisers include all sales through retailers, such as Walmart, with floor areas over 2,500 square meters that carry full lines of both grocery and general merchandise. Supermarkets include all sales through retailers with floor areas of 300–2,500 square meters that offer a wide, departmentalized range of grocery, and may carry some general merchandise lines; examples include Sainsbury's and Kroger.

Vending machines Includes paid-for sales from all vending machines not located within a store, such as public places, workplaces, pubs and bars.

Other general retailers Includes other generalist retail channels not included in the categories above, such as market traders, charity stores and student union stores.

Specialist retailers Clothing, footwear, accessories and luxury goods specialists

Includes all sales through retailers where clothing, footwear, accessories or luxury goods are the main footfall drivers and account for the majority of sales.

Drug stores and health and beauty stores

Includes all sales through beauty and cosmetics specialists, drug stores, pharmacists, health stores and opticians.

Duty-free retailers Includes all sales through airside retailers in airports or on board an aircraft or ferry. Excludes tax-free purchases by tourists at conventional stores.

Electrical and electronics specialists

Includes all sales through retailers where electrical or electronic goods are the main footfall drivers and account for the majority of sales.

Food and drinks specialists Includes bakers, butchers, delicatessens, greengrocers, fishmongers, drinks specialists and single-category stores selling, for example, only cheese or olives.

Home furniture and housewares retailers

Includes all sales through retailers where floor coverings, furniture or housewares are the main footfall drivers and account for the majority of sales.

Home improvement and gardening supplies retailers

Home improvement includes all sales through retailers specializing in home improvement tools and materials, primarily aimed at consumers rather than trade needs, for example Home Depot or B&Q. Gardening supplies encompasses all sales through retailers that specialize in the sale of plants and related tools and products

Music, video, book, stationery and entertainment software specialists

Includes all sales through retailers where books, entertainment software, music, stationery or video products are the main footfall drivers and account for the majority of sales.

Other specialist retailers Includes all sales through flower stores, gift stores, jewelers, pet stores and other stores that focus on one specific product or category, such as sunglasses stores.

Online retailing Overall Includes all sales of the relevant category that take place over the internet, irrespective of whether the vendor is solely an internet-based company or the online arm of a conventional retailer.


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Analysis Report


1.4 Financial and Operational Metric Definitions

Table 3: Financial and Operational Metric Definitions

Parameter Definition

Capital expenditure Expenditure by a company intended to create future benefits, for instance to buy or upgrade its fixed assets.

Debt ratio The proportion of a company‘s debt relative to its assets.

Formula: total debt / total assets

Debt to equity ratio The proportion of a company‘s debt relative to its shareholders‘ equity. The debt to equity ratio is a measure of a company's financial leverage.

Formula: total liabilities / shareholders‘ equity

Earnings per share The net income of a company per each outstanding share.

Formula: net income / number of common shares

EBIT Earnings before interest and taxes (EBIT), or operating income, is a measure of a company‘s profitability that excludes interest and tax.

Formula: revenue - operating expenses

EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) is a profitability measure which adds back interest, taxes, depreciation and amortization to net income. The measure can also be used to compare profitability between companies in different industries as it eliminates the effects of capital structures and accounting decisions.

Enterprise value (EV) Enterprise value is a valuation measure and is the market value of a company‘s total business.

Formula: market capitalization + (debt + minority interest + preferred shares) - cash and cash equivalents.

Fixed asset turnover Fixed asset turnover is the ratio of net sales to fixed assets. It indicates how efficiently a company is using its fixed assets to generate sales.

Formula: net sales / fixed assets

Interest coverage Interest coverage ratio measures a company‘s ease of paying interest on its debt with its earnings before interest and taxes.

Formula: EBIT / interest expense

Inventory turnover Inventory turnover ratio indicates how many times a company's inventory is sold in a year. A low ratio implies poor sales and a high ratio implies strong sales.

Formula: cost of goods sold / inventory

Market capitalization Market capitalization (market cap) is a measure of a company‘s size. It is the total dollar value of a company's outstanding shares.

Formula: share price * number of shares outstanding

Net income Total earnings (or profit) of a company.

Net profit margin Net profit margin is the ratio of a company‘s net profits to its revenues. It indicates the percentage of revenues that are translated into profits.

Formula: (net profit / revenues) *100

Number of employees The total number of full-time employees of a company at the end of a given time period.

Operating expenses All the expenses incurred in the normal course for running a business, and it includes cost of goods sold.

Operating margin Operating margin is a ratio used to measure a company's pricing strategy and operating efficiency.

Formula: (operating income / revenues) *100

Price/earnings ratio (P/E) Price/earnings (P/E) ratio is a measure of the price of a share relative to the annual income earned per share. It is a financial ratio used for valuation: a higher P/E ratio means either the stock is expensive compared with those with a lower P/E ratio, or investors are expecting comparatively high future earnings growth.

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Analysis Report


Formula: price per share / earnings per share

Quick ratio Quick ratio indicates a company's ability to immediately meet its short-term liabilities with its near-cash assets.

Formula: (current assets - inventories) / current liabilities

Retail floor space The area of that part of a retail store in which merchandise is displayed and sales are made.

Return on assets Return on assets indicates a company‘s profitability relative to its total assets. It measures the management‘s efficiency in using the assets to generate income.

Formula: (net income / total assets)*100

Return on capital employed (ROCE) Return on capital employed is a ratio that indicates a company‘s efficiency in translating capital investments into earnings.

Formula: EBIT / (total assets - current liabilities) *100

Revenue The total amount of dollars that a company actually received for goods or services sold during a year.

Shareholders‘ funds The balance sheet value of the shareholders' interest in a company.

Store numbers The number of stores operational at the end of a given time period.

Total asset turnover ratio Total asset turnover is the ratio of net sales to total assets. It indicates how efficiently a company is using its assets to generate sales.

Formula: net sales / total assets

Total assets Asset is a balance sheet item representing what a company owns. It is a resource owned by a company, which is expected to generate future benefits. Total assets are the sum of all the assets owned by a company.

Total debt Debt is the amount of money borrowed by a company from other parties. The sum of all the debts owed by the company is referred as total debt.


INTRODUCTION


Analysis Report


1.5 Summary Methodology

1.5.1 Overall Research Methodology

Canadean‘s Company Benchmarking Analysis Reports utilize a wide range of primary and secondary

sources, which are analyzed and presented in a consistent and easily accessible format. The reports follow a

standardized research methodology to ensure high levels of data quality:

Review of Existing Databases – Canadean maintains databases of industry and company operational data

and analysis, which are used as the foundation for its benchmark analysis.

Data Sources for Research – Collection of the latest company-specific data from reliable sources at both a

national and international level. Sources used include:

SEC filings

Company websites

Reliable third party sources

Data Consolidation – Canadean‘s analysts capture all relevant information for a particular company after

going through reliable sources, and at the same time check other third-party sources for corroborative

evidence.

Creation of Benchmark Models – Analysts feed the latest and reliable company specific data into the

benchmark models to generate scorecard.

Analyst Review – Modeled data is refined by experienced analyst teams, based on information collected

from primary and secondary sources across the industry.

Quality Control – Canadean rigorously conducts checks on the data and processes throughout the

production of every benchmark report, to ensure that the highest levels of data quality are maintained across

the portfolio.

Currency Conversion – All data is collected in local currencies. To avoid distortions due to exchange rate

fluctuations, all conversions into US dollars of both current and historical data are made at the 2010 average

conversion rate. All figures in tables are displayed to one decimal place, and growth rates may, therefore,

appear inconsistent with absolute values due to rounding.

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Analysis Report


1.5.2 Scorecard and Heat Chart Methodology

Introduction

The company benchmarking scorecard analyzes the performance of the peer group of companies selected

relative to the overall, global industry channel average (as covered in Canadean‘s Retailer Company

Benchmark database). The Heat Chart provides a summary view of this analysis for an ―at-a-glance‖

comparison.

The scorecards themselves are based upon assessment of select metrics of performance, grouped into

three different ―pillars‖ of analysis:

Scale and Growth: This pillar assesses the market strength and its development for each retailer. It

covers a range of metrics not only in absolute terms, but also in terms of growth in order to provide a better

measure of overall performance and boost the scores of fast-growing retailers.

Operational Efficiency: This pillar assesses how efficiently a retailer is operating — a critical measure of

overall performance. The metrics chosen typically relate sales or profit data relative to the factors critical in

generating them, effectively analysing how hard a retailer is ―sweating its assets‖.

Financial Performance: The last pillar assesses how well a company is performing financially compared

to its peers.

A complete list of all the metrics, grouped by pillar, is given below. Please refer to the definitions section for

full details of how each metric is calculated.

Table 4: List of Company Benchmarking Metrics by Pillar

Scale and Growth: Operational Efficiency: Financial Performance:

Revenue EBITDA margin ROCE

Revenue growth Net profit margin Return on assets

Retail floor space Inventory turnover Earnings per share (basic)

Growth in floor area Sales per square meter P/E ratio

Store count Operating profit per square meter Quick ratio

Growth in store count Sales per employee Debt to equity

Employee count Operating profit per employee Debt ratio

Growth in employee count Fixed asset turnover Capital expenditure

Market capitalization EV/sales

EV/EBITDA

Interest coverage


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Analysis Report


Analytical Framework

To conduct the scorecard analysis, which also provides all the data for the Heat Chart, a strict framework is

used in order to ensure comparability and robustness of the results:

Peer Group and Global Channel Comparisons: The peer group and the retailers to which it is compared

are select companies from the Canadean‘s Retailer Company Benchmark database. The comparison

group of retailers includes all public retailers covered worldwide which mainly operate in the same channel

as the peer group, and therefore all scores are relative to the global channel average (excluding private

retailers). While the database contains data from both public and private companies, only public companies

are considered for the company benchmarking analysis reports. In order to create a peer group, public

retailers of a particular geographical region are filtered. The list is further filtered based on the primary

channel of operations. Finally, the list is sorted in descending order of 2010 revenues. Based on the length

of the list, a minimum of four and a maximum of 10 peers are considered for a peer group. The global

channel group (against which comparisons are made) includes all the public retailers of the company

benchmark database within the particular channel of operation, irrespective of their geographic operations.

Final Screening of Data: The data selected to be analyzed is then reviewed by each metric and any out-

of-range or abnormal data points are removed to avoid bias in the results. This produces a final data set for

the analysis to be conducted upon, for each individual metric covered.

Analysis of Company Metric Results: In order to create a relative measure of performance between the

peer group companies, and to place this into the context of their performance compared to the overall

channel worldwide (excluding private retailers), each individual peer metric is assessed on the basis of its

variation to the average for the global channel average (excluding private retailers). To do this, first the

standard deviation and mean for each individual metric for the overall global channel group (excluding

private retailers) is calculated. Next, results are ordered from highest to lowest and are grouped into five

groups on the basis of how their result compares to the average:

a) Very High – result is more than 0.67 standard deviation above the global channel mean

b) High – result is between 0.33 and 0.67 standard deviation above the global channel mean

c) Medium – result is +/- 0.33 standard deviation from the global channel mean

d) Low – result is between 0.33 and 0.67 standard deviation below the global channel mean

e) Very Low – result is more than 0.67 standard deviation below the global channel mean

Assigning Peer Scores by Metric: For each metric being analyzed, all the companies within the peer

group have their result graded by the above scale. Later, their results are given scores based on which of

the above five groups it falls into, using the following system:

a) Very High – a score of 10 is assigned to the metric for the company

b) High – a score of 8 is assigned to the metric for the company

c) Medium – a score of 6 is assigned to the metric for the company

d) Low – a score of 4 is assigned to the metric for the company

e) Very Low – a score of 2 is assigned to the metric for the company

Ranking within the Peer Group– In order to make the scorecard results easier to compare at a glance,

each company in the peer group is also given a rank score relative to the peer group, for its performance in

each metric.

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Analysis Report


Final Scorecard Compilation: The results for each metric are then placed within their respective pillars of

analysis: Scale and Growth, Operational Efficiency and Financial Performance. To calculate the score of a

pillar, the scores of all the constituent metrics are averaged. Similar to the scores of all the metrics, the

scores of pillars are out of 10. After calculating the scores, each pillar of a company in the peer group is

ranked based on the average score of the pillar. Similarly, the overall score and rank of a company are

computed.

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Analysis Report


Table 5: Sample Company Benchmarking Scorecard

Metric Unit Value Rank

(within Peer Group) Score

Scale and Growth:

Revenue US$ million 7,247.8 9 6

Revenue Growth % -1.6% 9 2

Retail Floor Space '000 sq m 2,239.6 7 6

Growth in Floor Area % 0.0% 7 4

Store Count Absolute 514 8 6

Growth in Store Count % -0.2% 7 4

Employee Count Absolute 22,050 10 6

Growth in Employee Count % -4.1% 7 4

Market Cap US$ million 530.9 10 6

Scale and Growth Weighted Total 8 5.8

Operational Efficiency:

EBITDA Margin % 0.3% 9 2

Net Profit Margin % 0.4% 9 4

Inventory Turnover Ratio 11.0 9 4

Sales per Square Meter US$ 3,236.2 9 2

Operating Profit per Square Meter US$ 8.9 9 2

Sales per Employee US$ 328,698.4 2 6

Operating Profit per Employee US$ 904.3 9 4

Fixed Asset Turnover Ratio 10.6 1 10

Operational Efficiency Weighted Total 9 3.8

Financial Performance:

ROCE % 2.1% 9 4

Return on Assets % 1.6% 9 4

Earnings per share (basic) US$ 0.5 9 6

P/E Ratio Ratio 18.4 2 6

Quick Ratio Ratio 0.4 9 4

Debt to Equity Ratio 0.0 9 2

Debt Ratio Ratio 0.0 10 2

Capital Expenditure US$ million 189.1 9 6

EV/Sales Ratio 0.1 10 2

EV/EBITDA Ratio 20.0 1 6

Interest Coverage Ratio 0 0

Financial Performance Weighted Total 10 4.2

Overall Weighted Total 9 4.6

Source: Company financial reports and Canadean © Canadean

INTRODUCTION


Analysis Report


Heat Chart – The overall and pillar scores of all the companies in the peer group are summarized in the

Heat Chart. Assuming the scores of the global channel group are normally distributed, the minimum

possible score for a pillar is 2 and the maximum is 10. The mean is 6. The scores are grouped into five

buckets on the basis of how their result compares to the average for the channel globally:

a) Very High – result is more than 0.67 standard deviation above the global channel mean (Score >

6.9)

b) High – result is between 0.33 and 0.67 standard deviation above the global channel mean (6.2 >

Score > 6.9)

c) Medium – result is +/- 0.33 a standard deviation from the global channel mean (5.8 > Score > 6.2)

d) Low – result is between 0.33 and 0.67 standard deviation below the global channel mean (5.1 >

Score > 5.8)

e) Very Low – result is more than 0.67 standard deviation below the global channel mean (Score <

5.1)

Each bucket is represented with a color code for easy interpretation of the comparative performance. The

color coding is on a white-yellow-red scale, where white represents the lowest activity and red represents

the highest activity. A sample Heat Chart is shown below:

Figure 1: Sample Heat Chart

Each company is scored across a number of metrics encompassing three pillars of analysis: Scale and Growth, Operational Efficiency

and Financial Performance. This is done on the basis of how a company‘s result varies to the average for the channel globally

(excluding private retailers). The average of these scores in each pillar of analysis is displayed above and represented with a color code

for easy interpretation.


EXECUTIVE SUMMARY


Analysis Report


2 Peer Group Summary Analysis

Text

2.1 Heat Chart

Text

Figure 2: Heat Chart


EXECUTIVE SUMMARY


Analysis Report


2.2 Insights from Competitive Benchmarking Analysis

2.2.1 Scale and growth competitive benchmarks

Text

2.2.2 Operational efficiency competitive benchmarks

Text

2.2.3 Financial performance competitive benchmarks

Text

EXECUTIVE SUMMARY


Analysis Report


2.3 Company Name – Company Benchmarking Scorecard

Table 6: Company Name – Company Benchmarking Scorecard

Metric Unit Value Rank Score

Scale and Growth:

Revenue US$ million

Revenue growth %

Retail floor space Thousand square meters

Growth in floor area %

Store count Absolute

Growth in store count %

Employee count Absolute

Growth in employee count %

Market capitalization US$ million

Scale and Growth Weighted Total

Operational Efficiency:

EBITDA margin %

Net profit margin %

Inventory turnover Ratio

Sales per square meter US$

Operating profit per square meter US$

Sales per employee US$

Operating profit per employee US$

Fixed asset turnover Ratio

Operational Efficiency Weighted Total

Financial Performance:

ROCE %

Return on assets %

Earnings per share (basic) US$

P/E ratio Ratio

Quick ratio Ratio

Debt to equity Ratio

Debt ratio Ratio

Capital expenditure US$ million

EV/Sales Ratio

EV/EBITDA Ratio

Interest coverage Ratio

Financial Performance Weighted Total

Overall Weighted Total


BENCHMARKING ANALYSIS


Analysis Report


3 Company Benchmarking

3.1 Scale and Growth Competitive Benchmarks

3.1.1 Geographic Region leading channel operators by revenue, 2006–2010

Text

Table 16: Geographic Region Leading Channel Operators by Revenue (US$ Million), 2006–2010

Company 2006 2007 2008 2009 2010 CAGR 2006–2010

Company 1

Company 2

Company 3

Company 4

Company 5

Company 6

Company 7

Company 8

Company 9

Company 10

Peer Average


BENCHMARKING ANALYSIS


Analysis Report


Figure 3: Geographic Region Top Five Channel Operators by Revenue (US$ Million), 2006–2010


APPENDIX


Analysis Report


4 Appendix

4.1 About Canadean

Canadean is a full-service business information provider with in-house market research capabilities. We

specialize in analysis across the Consumer Markets Value Chain, covering suppliers, producers, distribution

and consumers.

Canadean‘s dedicated research and analysis teams consist of experienced professionals with an industry

background in marketing, market research, consulting and advanced statistical expertise. We offer value-

added market research, insight and strategic analysis and our products help companies to make better,

more informed, strategic and tactical sales and marketing decisions.

Canadean‘s areas of expertise include online research, qualitative and quantitative research, industry

analysis, custom approaches, and actionable insights. In addition Canadean has built a network of

consultants and specialist researchers across more than 60 countries, each with in-depth industry

experience and expertise enabling us to conduct unique and insightful research via our trusted business

communities.

4.2 Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any

means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the

publisher, Canadean.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please

note that the findings, conclusions and recommendations that Canadean delivers will be based on

information gathered in good faith from both primary and secondary sources, whose accuracy we are not

always in a position to guarantee. As such, Canadean can accept no liability whatsoever for actions taken

based on any information that may subsequently prove to be incorrect.

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